Clean Energy In the News

Montalbano

PROVIDENCE — Senate President Joseph Montalbano introduced four energy-related bills yesterday that he said will spark development of small-scale renewable-energy projects in Rhode Island’s city and towns, foster private investment in large-scale wind and solar projects, stabilize electricity prices, and at the same time, spur economic development within the state.

Montalbano unveiled the package of bills yesterday at a State House news conference, flanked by other Senate leaders, including Majority Leader M. Teresa Paiva Weed, D-Newport, and Minority Leader Dennis L. Algiere, R-Westerly.

The legislation was embraced by at least two environmental organizations — Environment Rhode Island and the Conservation Law Foundation — both of which helped draft the bills.

“This package of legislation encourages the development of renewable energy in Rhode Island,” Montalbano said. “It gives us the triple benefit of cleaner air, stable utility prices and the surge of economic development associated with producing and using more renewable energy in our state.”

The bill that may have the biggest long-term impact is one that requires National Grid to enter into “commercially reasonable” long-term contracts to buy renewable energy from developers who plan to build large-scale renewable energy projects. The company would be required to buy at least 5 percent of the power it delivers to Rhode Island, and the contracts would last 10 to 15 years.

The bill, according to Montalbano, would encourage renewable-energy project development because the long-term contracts would help the developers garner private investment. A developer is more likely to find investors if it has a customer committed to buying electricity for a long period of time.

National Grid has opposed such a provision in the past because it saw these commitments as risky. If the market price of electricity fell below the cost it agreed to pay a renewable-energy developer, customers might opt to buy power from another supplier. That would leave National Grid stuck with a commitment to buy power but fewer customers to sell it to.

“There’ve been instances in the past where we have been burned,” said Michael F. Ryan, president of Rhode Island distribution for National Grid.

The bill essentially shifts that risk to ratepayers by allowing National Grid to spread out any extra cost to buy the renewable energy among all its customers through a distribution rate surcharge. Conversely, National Grid would have to credit customers if the market price rises above the renewable-energy contract price.

National Grid would also have a financial incentive to enter into these contracts. The company would receive an amount equal to 4 percent of the payments it made each year to the developer it contracted with, once the project started producing electricity.

Montalbano said that the bill does not require the renewable energy project to be located in Rhode Island. But the Public Utilities Commission, which must approve any contract National Grid proposes to enter into, would favor contracts that support projects having a direct economic benefit to Rhode Island, said Jerry Elmer, a staff attorney for the Conservation Law Foundation. For example, a contract with a company that hires Rhode Island workers to assemble wind turbines at Quonset Point would be looked at more favorably than one with a company that assembles, constructs and installs its wind turbines out of state.

Another bill would shift control of the fees collected from electricity customers for the benefit of renewable-energy and efficiency programs from the state Office of Energy Resources to the state’s Economic Development Corporation.

The EDC already is in charge of administering money paid by National Grid as an “alternative compliance payment.” State law requires a certain percentage of the company’s electricity purchases to come from renewable resources. If it can’t achieve that requirement, it has to make these alternative compliance payments to a fund controlled by the EDC.

The purpose of the bill is to consolidate these separate sources of money for renewable energy under one agency, and coordinate how the money is spent. In the past, these funds have gone to help pay for small, residential solar and wind projects, as well as larger installations at schools.

But under the legislation, half the money, or $1 million, whichever is less, would be earmarked for renewable-energy projects by municipalities. That provision could benefit several communities that are planning to install wind turbines, said Paiva Weed, the Senate majority leader.

The Office of Energy Resources would provide guidance to the EDC for how the money should be spent.

The minority leader, Algiere, said he had not yet consulted with Governor Carcieri’s office about the legislation, but he said he planned to.

A third bill expands an existing practice known as “net-metering.” State law now allows a limited number of customers who have their own wind turbines or solar panels to provide any excess power to National Grid, in exchange for a credit on that customer’s electricity bill. The new legislation would raise the overall cap on how much customers could get credit for. And it also allows a municipality or school to bank those credits to be carried over for a year, or have them applied to another account.

The last bill would require existing state buildings to purchase a certain percentage of its electricity from renewable sources. That percentage would gradually increase, coinciding with the percentages of renewable energy that National Grid must buy under a law passed last year.

“We’re very supportive” of the legislation, said Matt Auten, an advocate for Environment Rhode Island. “There’s a unique opportunity for Rhode Island to become a leader in the production and development of renewable energy.”

He said members of his organization have been frustrated with the lack of actual development of renewable-energy projects in the state, and that these bills will help get the industry started.

The Conversation Law Foundation said it was particularly supportive of the legislation requiring long-term renewable-energy contracts. The organization was pleased that National Grid has dropped its opposition to those provisions, said Elmer, the staff attorney.

tbarmann@projo.com